The CWB and Rats

[parsley]

In response to ianben's comments in the thread, Life After the CWB
The farmers in England are one jump ahead of the farmers in Canada. They can sell their wheat to a rat-baiter in England. or not sell to the rat-baiter. As a farmer, You can even start a company and go into competion with the rat-baiter. We can't automatically do that in Canada.

Here all elevators and grain cleaning buildings are declared , by the government, in legislation, as "works for the general advantage of Canada". Here we can sell only to the government's CWB. It exports the wheat and a company in the USA or elsewhere, could manufacture the bait and they ship it back to the store in Canada to sell it. Government employees (Rat Patrol Agents) administer the rat bait on farms , service the rat sites on farms.

. Now there might be a secret deal that the CWB BureaucRats have made with the rat companies and they are letting them manufacture rat wheat-bait without going through the CWB and doing the buyback....like in the EMFA. The governments are probably raising rats somewheres too.

CWB allowing RatBaitCompanies to buy Rat -Bait wheat without the buyback .... if everyone promises no-one rats! Sounds feasible to me!

Most of the time in Canada, ianben, this is what happens Some guys want more of the same with canola and flax. I'm trying to give them reasons why they need to look at what's happened and how to find out where the biggest trouble lies.

I've started this new thread. The old one takes too long to download.
Parsley

[dsheehan-millang]

Parsley, thanks for the opportunity to play catch up on all the submissions so far.

For the benefit of ianben and other international Agri-ville visitors:I am a representative of the CWB, and provide moderator services to this site on my own accord. An involuntary, couple week hiatus has prevented me from responding to the many 'calls to attention' that were issued by a few participants in this forum.

The CWB is a marketing agency that operates a single desk, selling on behalf of western Canadian farmers. The CWB sells wheat, durum and barley for export, and for human consumption in Canada. The grain marketed is only that grown in western Canada.

This organization is run by 10 elected farmer directors, and five federally appointed directors and is not an arm of government. There is guidance in the act for the process for any grains to be added or deleted from the CWB's mandate. So the CWB exists by virtue of a federal parliamentary act, and farmers themselves validate its existence through electing directors. Arguments about electoral apathy, misrepresentations about the true democratic nature of the organization and theories of governmental control of the organization are voices of dissent towards the organization. The election process is clear, and eligible producers can cast their vote every four years.

The originators of this Act understood that a single desk selling agency can create market advantage. But it is only effective when that advantage can be maintained and not undercut (create a market advantage and individuals will cherry pick it if possible - its economics). After all, a multiple seller environment means no single desk. So all the arguments that are presented that are around the edges miss a key point - does this marketing structure add value to western Cdn producers? Valid questions to evaluate this are welcome, but tirades that are focused on a penchant to deflect from the true democratic farmer control of this organization and leave false impressions of overt government involvement are outdated and undermine democracy. Accountability rests with the democratic process.

Regarding the Export Manufactured Feed Agreement - much ado about nothing. And again, the farmer directors of the CWB have prerogative over this type of policy, as long as they meet the Act's intent. There is an open and competitive feed grains market in western Canada. Farmers have been able to sell feed grains to whom they choose in that market since the early 70's. Therefore, feed mills can buy from who they choose. The CWB doesn't actively participate in this market.

The processed feed product does not compete directly with the CWB sales into the US market. But there is an open feed market in Canada, and the mills can buy at the price they can negotiate with farmers. There is currently no off-board Canadian market for milling quality wheat ot barley from western Canada for food use. This is the difference and the point missed so far on why there is no buyback for manufactured feed products and there is for export of the raw grain or for grain to be processed into export food products. Those products will directly compete with the single desk, and affect the pool returns for all farmers.

So the arguments focus on rhetorical, heart-string issues to avoid acknowledgement that the CWB creates value for farmers at a time when added value is so desperately needed.

The premise of some of the questions, decrying the CWB as the cause of economic loss on the Prairies, or of somehow having a self-serving view in its policy development is mischievous at best and deliberately malicious at worst.

There are pricing and payment programs where farmers can fix a price off of Minneapolis and take the individual risk or reward. There are programs where farmers can develop direct, personal relationships with international customers (the PDS sale program). These programs are developed to preserve the single desk and offer MORE options than an open market would offer because the single desk remains. A dual market is a myth.

The essence of the additional value the CWB creates is by virtue of the single desk. And all revenues, less net marketing and logistics costs and administration of about $2.70/tonne go to farmers. No retained earnings. No infrastructure overhead other than administration. Compare that to fluctuating basis levels on open market grains in Canada and the US. Canola basis that varied by $25/tonne since September. Basis levels in the US for wheat that have fluctuated by similar amounts.

There is no question that Cdn grain would move to market without the CWB. The question is would there be more or less value for farmers without the CWB? Farmers have been granted ownership of the organization, and control its destiny.

There are good questions that help add value to farm management and there are ones that are a waste of cyberspace.

Let's stick to the valuable ones.

Tom

[parsley]

It almost sounds as if the CWB doesn't market feed wheat and barley anymore, so I'll ask the question directly, Tom, and you can answer with a yes or no....does the CWB still market feed wheat and feed barley?
Parsley

[parsley]

Chas, I'm holding good to my promise that we'd take a look at who stands in the farmers' way to carrying on a business that, in a friendly way, creates wealth . The following is Reason #3 why governments cannot be regulators and players at the same time if farmers are to make money.

3. Regulations often become a tool to favor Government &/or /Business interests instead of fostering productivity and sustainability. This is another reason why we don't want governments to be a player in agriculture

Government and business partnering in the grain industry can be bad for the producer. For agriculture. If you think that the regulations that the CWB come out with are to help you as a producer Chas, you've been SOAKING in a tub filled with your dandelion wine. Regulations end up working in favor of the big players. Especially when the regulator softens.

The EMFA is a good example of the regulator (CWB) defending non-pooling of wheat and barley, while promoting pooling of wheat and barley

It often seems that quite a few of the power-seeking CWB bureaucrats are moved by a political concern...... for the common good.......... and most of the regulations that are brought forward stem from these people. Farmers interests disappear. The farmer doesn't matter. Equality of opportunity doesn't matter. The system matters.

Parsley

PS I forgot to note that not only grants but tax-credits become a self-interest tool. in Reason#2

[parsley]

This is the last Reason why governments should not be regulators and players at the same time if farmers are to make money. Chas, I won't be promising to do all this work again!

4. The market loses power....
When the power of the market becomes shared between Government and Corporation, a problem that arises is mistrust. Issues of wrongdoing sufaces. It's a sensitive issue.

Prime Minister Chretien, as we speak, is answering questions about his role as both a regulator and a player in a hotel fiasco. Government and Corporation. Grant-giver and grant-taker. Was it Self-serving ? Some of his bureaucrats will show anger towards the tough questions, saying it will undermine democracy, but for the most part, they understand each and every question becomes valid when it comes to accountability. . The truth of it is, the hard questions must be answered so the people know who to vote for.

One only has to look at polls that measure respect towards elected officials, and governments as a whole, to find a surprising level of contempt out there. Perhaps it is because fraud and corruption charges placed against persons in positions of trust in G7 countries, today, is in the news more frequently. It's a problem.

Most would agree that the Farm Community no longer have the same trust in those placed in positions of authority and influence, like they once did.

When the governmemt becomes a partner, its' role as regulator is altered and weakened. Who's interests come first?


For those that want to permanently ....control the market...or bend it, or break it and or re-design it.....You can't. Somewhere it the world, it survives. Farmers will be not be successful at taming the market, just as they are not successful at taming nature, so they had better learn to work in harmony with both markets and nature. Chas it's the same approach to take with the wife.
Parsley

[parsley]

The CWB continues to market feed wheat and feed barley for export.

[calfarmer]

BRAVO Thalpenny!!!
You speak the truth if only the parsley's in this world could see the
light,we could get on to solving our
farming woes.

[ianben]

Hi, good idea to start again.
Yes Parsley I could start a rat bait company in England. We get the same advice as you add value, diversify, you name it we should do it. Why? Have I not got enough money invested or am I not taking a big enough risk with farming? Do I know anything about the rat bait industry? Does it need more competition? Do I need more work and worry? NO.NO.NO.NO.!!!
I am a proffesional grain grower who wants to market his grain useing 21st century methods.I harvest my grain with a Case 2388 not a MF 780.
This is what the CWB should remember and realize it is a true global market and you are no longer the key player. So reinvent yourself try something radical. Live up to your reputation and gain some control over the market because I realise good prices for you will be good for me too.
I must agree Parsley this is getting to be a habit but I am enjoying the chat.
Nearly midnight AGAIN!
Goodnight Ian.

[TOM4CWB]

The CWB and MYTHS,


The CWB says, “A dual market is a myth.”

Am I a MYTH then?

My understanding of a “dual market” is an open or individual marketing system, operated by free choice, competing against, a voluntary pool marketing arrangement that has been, by agreement, formed for the mutual benefit of those who choose to be in the pool.

That’s funny, does this mean that my volunteer pooling my timothy seed, fescue seed, peas, seed wheat, seed barley, canola, and all the other co-operative pools that I personally am in, do not exist, and are a myth also?

Dual Marketing happens every day in Eastern and Western Canada, in the USA, and around the world whether the CWB denies it or not!

I do not get put in jail if I leave any one or all of these pools do I?

Why?

Is it because we choose to respect each other, and agree to co-operate?

Why?

Could it be because when we voluntarily work together, we can benefit from allowing each other’s strengths, and all are stronger as a result?

I preferentially market my products, and price discriminate to various markets every day, but not with a gun to my head, except with the good old CWB.

Allowing the Freedom of Spirit and Will of another human being, and allowing this person the freedom to choose their own destiny, IN MY OPINION is the first most basic right of a human in this Universe.

Could the following be CWB Myths?

“Farmers have been granted ownership of the organization (CWB), and control its destiny.”

Let us look in the CWB Act to see if this is Myth or Fact.

CWB Act 3.12 Directors and Officers

3.12(2)The directors and officers of the Corporation shall comply with this Act, the regulations, the by-laws of the Corporation and any directions given to the Corporation under this Act.




CWB Act 18 Directions by Governor in Council

18.(1)The Governor in Council may, by order, direct the Corporation with respect to the manner in which any of its operations, powers and duties under this Act shall be conducted, exercised or performed.
(1.1)The Directors shall cause the directions to be implemented and, in so far as they act in accordance with 3.12, they are not accountable for any consequences arising from the implementation of the directions.
(1.2)Compliance by the Corporation with the directions is deemed to be in the best interests of the Corporation.

The practical side of this legislation is that the CWB staff must get approval for finances and sales of grain from the Government of Canada, since they guarantee all CWB activity. CWB policies are formed and approved by the CWB legal staff (Responsible to the Attorney General of Canada) and they simply tell the Board of Directors what they will or will not do.

Is this “Farmer ownership and control”?


“The essence of the additional value the CWB creates is by virtue of the single desk.”

Another Myth?

I would submit that the CWB does not create any additional value.

Why?

Any value that would be created by the “single desk” could be created, and in fact enhanced by allowing competition to hone the skills of the participants that had agreed to co-operatively market their grain together.

Co-operation is always more productive than coercion in the long run. The CWB spends literally millions of dollars each year protecting the “monopoly single desk” instead of paying attention to business and doing a good job of marketing our grain!

Why would the CWB ever be afraid to compete for our grain, if they are sooo gooood?

The CWB says, “There are good questions that help add value to farm management and there are ones that are a waste of cyberspace.

Let's stick to the valuable ones.”

I believe any question is a good one, if it causes people to think, don’t you?

The MYTH that we CWB critics are “deliberately malicious”!

IS THIS NOT THE POT CALLING THE KETTLE BLACK?

If you had a gun to your head, how happy would you be?

Take the gun away, then we will become constructive and build each other up!

Wouldn’t that be better?

[chas]

Parsley you are getting my message and I think your getting charlie's too. Farmers are getting control of the wheat board to control their marketing in an orderly fashion. Corportations are in the pockets of government to set regulations to befit corportations not farmers. That's why I keep stressing that farmers of the world have got to own and control their own marketing boards and sell to the end user. The open market doesn't work, ask ianben. Parsley this dam website isn't working a whole lot better than to old one, other than Thalpenny freshen it up with alot of truths on marketing that ianben should be considering. Tom4cwb your canola contract is fine but I didn't consider it because of yield and variety prospects. Parsley, appman and you other Sask. farmers, the Alberta Government has a huge surplus in the general account and has ask residents of our fair province what we should due with the access. I suggested that we buy Saskatchwan and make a North American land fill site out of it as we can't seem to make a living farming it and there is money in garbage. SORRY Sask but that seems to be the attitude of this political and corportate mess that we have created. Chas non whiner.(wine}

[parsley]

Chas, you ought to get more sleep, you must work all the time.

This is what you say:

"Corportations are in the pockets of government to set regulations to befit corportations."

You think the corporations are pretty greedy, don't you? Take out corporations and substitute farmers:This is what you are asking for:


"Farmers are in the pockets of government to set regulations to befit
farmers."

Is this what you want?


calfarmer has jumped in, and glad to get your comments, but want to tell you it's darn hard to see that light at the end of the CWB darkness-tunnel of lies and misinformation. CWB bureaucrats have gotten away with feeding farmers misinformation-garbage, but they're not getting away with it these days. ...The Tom4CWB's of the farm community are able to pick out what are not facts!. (Remember, I was preaching about "Think clearly" Chas?).

calfarmer, Halpenny claims the CWB "is not an arm of government" Do you really buy that?
Parsley

[parsley]

Does the CWB serve
1. to add value to western Cdn producers or
2. is it an instrument of government?

Right from the beginning, the facts speak.

The following information stems from a CONFIDNTIAL document written on Thursday, May 2, 1946 at 5:00pm named the MINUTES OF THE WHEAT COMMITTEE OF CABINET MEETING

{keep in mind..the war is over ...it's 1946....and britain is short of food......canada's parliament is now operating the wheat board under emergency war legislation granted special powers that are soon running out.... and Britain wants a wheat contract}

Mr. MacKinnon "opened the meeting and read proposals put forward by United Kingdom officials to Mr. McIvor during his recent visit to London".......... "The proposal by United Kingdom officials had been that the $1.55 basis be maintained until July 31, 1946."

Mr McKenzie "pointed out the dangers of marketing Canda's wheat surplus in a limited number of other countries. This would have the effect of contracting trade."

Dr Wilson mentioned "the need of broad wheat exports to provide a sustaining cargo for Canadian shipping."

"It was finally agreed that the United Kingdom, through Sir Andrew Jonas, should be avised at once that Canada was prepared to proceed to negotiate a five-year contract on the basis of $1.55 per bushel No.1 Northern for the crop years 1946-47, 1947-48, and 1948-49; not less than $1.00 per bushel for 1949-50 and 1950-51 with the actual price to be determined in advance. The quantity involved would be 180 million bushels per year, a stated percentage would be in flour, the actual amount, to be subjective to negotiation. The Wheat Board Officials were instructed to proceed along these lines."

{at this point in time, the wheat board has a problem with its' powers ...if they enter the contract...after war....there is usually a hike in the price of grain........how do you get cheap wheat for the contract?}


Mr McNamara "raised the question of the Wheat Boars's authority to operate in the event of a contract being entered into."

Mr Gardiner "suggested that food contracts requiring special legislation could be expected to get the consent of Parliament"

"A letter from the Department of Justice to the Wheat Board was read, suggesting legislation necessary for
continuance of the Wheat Board powers,after July 31, 1946 This suggested providing adequate legislation by enacting Western Grain Regulations amendments as deemed necessary, to expire July 31, 1947. It was agreed, however, that the authority for continuing the present Wheat Board powers would be derived from an amendment to the National Emergency Powers Act rather than amendment to the Canadian Wheat Board Act."

Parsley

[charliep]

Just a note to everyone that I have not meant to be Pro or anti CWB. I simply try to ask questions that try to get people thinking about where we want to be as an industry versus where we are. If we know where we want to be, it will likely be a lot easier to develop a process to get there.

The issues I haven't heard about are our customers and how we are going to do a better job of meeting their needs. I sense the customer is almost yelling at us to say want they want. This could be Dolly barley for feedlots. This could be very specific variety requirements for feed peas to our domesic. Something to replace herrington barley as the disease issue pushes it out of rotations and a marketing program to convince customers of these new varieties merits. Crytal CPS with consistently higher protein that will be more competitive with Aussie standard white wheat in S.E. Asian noodle markets (heavan forbid I would suggest but a part of this developent maybe getting better white CPS wheats). The list goes on and on. We have a lot of alternatives to do this both within the current system and maybe a new one. It could be a hybrid of both. An advantage of Agri-ville is we can be creative in our thinking and get our ideas tested by our peers who feel as passionately about things as we do.

The other I don't here much about is relationships in the industry. We seem to like to bad mouth each other but at the end of the day we need to work together to provide our customers with a consistent quality crop when we say we are going to do it and at a competitive price based on its value. The question for you Parsley is who will you trust/be able to develop a relationship with to move your products forward to the final end user. What signals will you need from the market place to establish you are being treated fairly?

Charlie P.

[TOM4CWB]

Charlie,

I hope you can understand the MYTHS that our friend Tom Halpenny appears to be promoting at the CWB, which I would assume they agree with, are burning in the bottom of our bellies!

I don't have a conflict with any grain company, end-user or other marketer!

Why?

If we don't see eye to eye, we choose to not do business together!

When will the Government of Alberta, and the Government of Canada join together and allow Canada to become a free Country?

Then Charlie, we will be able to engage in what you speak of, get on with our lives and stop being the laughing stocks of the world!

Don't you get the feeling that every one is laughing at us because we choose to refuse freedom of choice?

[chaffmeister]

This is in response to thalpenny's comments that appear to be comparing the costs of moving CWB grain to those of the canola market. The arguments he used have been used by the CWB for years - they were flawed then and they are still. I apologize for the length but there's a lot to cover here.

I take issue with two concepts that were presented.

First, that the costs of the CWB (presented as $2.70 per tonne) are being compared to the variation in the canola basis. I'm not sure why he would compare a static cost with the variation in another, but that's not the real issue. The real issue is that far too often, the CWB tries to suggest that their stated costs are the "CWB basis" and they like to comapre it to the canola basis. The implication made by thalpenny is that the CWB's costs of $2.70 should be compared with the canola basis fluctuating $25. This is not just comparing apples to oranges - it's more like comparing apple pie to orange juice.

First of all, "basis" is a futures market term and it refers only to the difference between futures and cash prices. Period. And this often has little reflection on costs. Calling the cost to move grain from the prairies to Vancouver the basis is terribly misleading. There are additional components that make up the basis that are not simple costs from point A to B.

The canola basis fluctuates in response to supply and demand. True - costs such as freight, handling, cleaning, risk, administration and so on, are captured in the basis, but so is the relative ability of the system to perform.

Perhaps the most influential component on canola basis is stock levels in the elevator system. If stocks are low, the basis will move higher to provide higher prices for farmers (to provide greater incentive to deliver). The market is saying, "I need more canola to satisfy commitments. In addition, since it will move quite quickly, I can pay more for it since it won't get in the way of other business." Alternativley, if stocks are high, basis levels will drop to give less incentive to deliver. The market is basically saying, "I don't need your canola right now. If you sell it to me now, I have higher costs such as storage and opportunity costs, since the canola will sit in the elevator for a longer time." So the price moves lowered through the basis to cover those costs.

Wheat markets also have basis movements. Western Canadian farmers do not see these market signals as the CWB pricing system mutes them. The Initial Price (and PRO) system only reflects the average sales prices. If wheat prices get really strong for some reason, Western Canadian farmers cannot react to this - they can only hope and pray that the CWB is selling on their behalf.

If you want to compare the cost/efficiency of moving CWB wheat to the cost/efficiency of moving canola, in the interests of clearly understanding the situation, let's make sure we compare properly.

Which brings me to the second issue: the cost of the CWB is presented by thalpenny as only the "net marketing and logistics costs and administration of about $2.70/tonne". When looking at the cost of the CWB, more than this needs to be considered, especially when comparing to the canola (non-CWB market).

If the CWB wants to use basis levels to compare, lets's look at everything: apples to apples.

Taken from the CWB's Annual Report for 1998/99: "Direct costs include country carrying charges, terminal storage, demurrage net of despatch earnings, drying charges, depreciation and interest on the CWB hopper cars, and additional freight related to adverse movement to terminals, movement eastward of Thunder Bay into export position, and freight rate changes." In 1998/99 this figure was $149 million.

In addition, according to the CWB Annual Report: "Administrative and general expenses represents the allocation to the pool accounts of the cost of running the CWB." This was $56.6 million.

Total operating costs as reported by the CWB were $133.5 million. This includes the two figures above plus $1.7 million for participation in grain industry organizations and interest earnings of $72.5 milion (which is another issue that needs some clarity).

What this doesn't include is the cost to move grain through the elevator system. This isn't in the CWB financial reports because the CWB doesn't pay for it - however the farmer does. So, add another $10 per tonne for elevation and another $3.50 for cleaning (based on public tariffs submitted to the Canadian Grain Commission). (They vary from company to company, but these are average figures.) On 19.6 million tonnes handled by the CWB, this adds up to an additional $265 million.

The grand total of getting wheat from farm to market in western Canada in 1998/99 was roughly $398 million. On the 19.616 million tonnes of farm receipts reported by the CWB, this equals to just over $20 per tonne.

Now let's look at canola: Export basis is currently about $20 over the futures basis instore Vancouver. Street prices in Alberta are about $20 under the futures including freight (Canbra is closer to $10 under). So, the difference between the price received by farmers and the current export price in Vancouver is about $40 total. However, this includes freight of, say $25. Taking the freight away (so we can compare CWB apples to non-CWB apples) we get $15 per tonne of non-freight costs from farm to export position. This is what should be compared to the CWB's non-freight costs of $20 per tonne.

What about that $72.5 million in interest being earned by the CWB that is included in its direct operating costs? An undisclosed portion of this is a direct payment from the fed govt. going back to sales made to Poland and the USSR in the 80's. Since these customers haven't paid for the grain received back then, the Canadian fed govt is covering the interest exposure through direct payments to the CWB. This is clearly something that the private trade cannot enjoy, so to be fair we should remove it from our calculations regarding costs since really it is a revenue. $72.5 million on 19.6 million tonnes is about $3.70 per tonne benefit. Take this away and the CWB costs are more like $23.70 per tonne.

One last comment regarding thalpenny's reference to canola's basis fluctuation. The main components of canola country-level basis fluctuation are (1) changes in the export basis, and (2) changes in elevator stock levels as mentioned above. On one hand, any change of country basis due to export basis does not reflect a change in "cost" structure. On the other hand, changes to the basis due to near term supply/demand balances (stocks) reflect the real costs of storing canola as opposed to handling it. thalpenny's $20 fluctuation no doubt includes both types of influences.

It doesn't matter how you cut it - comparing real CWB costs to real non-CWB costs is probably not in the best interests of the CWB. In my view, the non-CWB market has the advantage. Now I guess the question is, to cover these higher costs, can the CWB consistently capture enough of a premium over what the private trade and farmers themselves could do on their own?